The Timken Case Essay

This memo will examine Timken Company's decision to acquire Torrington by examining the stand-alone value of Torrington, the synergies of this acquisition and the effect on Timken's investment grading.

Economies of scale: Timken has started consolidating operations into global business units to reduce costs. They have expected annual savings of $80 million by the end of 2007 after Torrington’s acquisition.(case) As large size is usually expected to yield production economies if manufacturing operations can be amalgamated, marketing economies if similar distribution channels can be utilised, and financial economies if size confers access of capital markets on more favourable terms.(book).Moreover, by reducing the combined sales forces, Timken expected to realize significant purchasing synergies by giving much large volume to a reduced list of suppliers in exchange for price reductions. One analyst estimated that those

Andrea Winfield considered issuing bonds was not a good option for financing the acquisition. She was particularly concerned about the increasing long-term debt and annual cash layout of $ 6.25 million for 15 years. We believe that her concerns are justified, because the Company had already significant amount of debt that could result in higher risks and stock price

(1) Synergy creation: The businesses of both companies are famous and highly complementary to each other.

In the late 1980s, propelled by the strong financial markets, a financial investor purchased KTM and took the company private. Though KTM had a good reputation and quality products, it had too many products, inadequate management, and

Joe Hinrichs, a recent Harvard Business school graduate, was hired in February 1996 to run the General Motors’s the Fredericksburg Torque Converter Clutch (TCC) manufacturing plant. At 29 years old, Hinrichs was GM’s youngest plant manager. Hinrichs was inheriting a poor performing plant that continually underachieved, losing money year after year. Improvements were desperately needed to increase the efficiency of the manufacturing process and reduce operating costs. GM had considered shutting down the plant; however, when a new bonding process, using carbon fiber, for the TCC was approved in 1995, GM instead invested thirty million dollars into the Fredericksburg plant to incorporate the new process.

Shakespeare Inc., a private publishing company issued its F/S on March 20, 2012. There were several accruals and events that the management of Shakespeare is considering to determine if they should be recognized or disclosed in Dec 31, 2011 F/S. In my opinion, the important things to focus on subsequent events are the period they effect and if their influence is material or not, so that in conclusion, the F/S are fairly presented.

Trinity Industries Inc. is a “diverse industrial company that has managed to tap a variety of market-leading businesses providing products and services to the energy, transportation, chemical, and construction sectors” (Trinity Industrial INC. – about us). Trinity’ 2015 10K annual report was used to derive the following information. Their main headquarters is located in Texas, their state of incorporation is Delaware, and they have been publicly traded since 1958 on the New York Stock Exchange, under the symbol “TRN”. Trinity employs over twenty thousand individuals primarily in the United States, and Mexico and maintains a distinct group of clients through their five segments. The first Rail Group, which is the heart of the company earned

Young Professional magazine was developed for a target audience of recent college graduates who are in their first 10 years in a business/professional career. In its two years of publication the magazine has been fairly successful. Now the publisher is interested in expanding the magazine’s advertising base. Potential advertisers continually ask about the demographics and interests of subscribers to Young Professional. To collect this information the magazine has commissioned a survey to develop a profile of its subscribers. The survey results will be used to help the magazine choose articles of interest and provide advertisers with a profile of subscribers. As a new employee of the magazine, you have been

The Timken Company – a leader in the bearing industry, is considering acquiring the Torrington Company. Torrington Company, a leading manufacturer of needle roller bearings which is an engineering solution segment from Ingersoll-Rand. Both companies operate and compete in same business and therefore, Timken is seeking substantial operating synergies from this largest acquisition of its history. With this acquisition, Timken is increasing the size of company by almost 50 percent. And, Timken will continue to concentrate on what it do best by buying a company in an industry, where it has a leadership position built on decades of expertise. Timken expects to expand its worldwide business base with new products and services as both companies

MRC, Inc. is a Cleveland based manufacturing company specialized in power brake systems for trucks, buses, and automobiles; industrial furnaces and heat treating equipment; and automobile, truck and bus frames. As till 1957 most of MRC's sales were made to less than a dozen large companies in the automotive industry, it was exposed to the risk inherent in selling to a few customers in a very cyclical and competitive market. To minimize the risk and to explore new business opportunity MRC's management decided to diversify their business operation. After their fifth successful acquisition, the CEO of MRC Archibald Brinton faced with a dilemma of whether to buy American Rayon, Inc.

meet both the investment and the financing objectives of the Timken Company. In that regard,

This report will now cover what the purchaser of my services can expect from the analysis and changes to come. The first thing that should and must be addressed is the basic structure of the networks themselves. If there is a mismatch between the basic structures of the two networks, the singular approach that will be followed with the new network must be figured out first. This does not mean that one network's general approach has to be chosen over the other, far from it. Instead, the singular best approach that covers the needed capabilities and metrics of the combined company has to be defined and mapped out. This will then lead to the structure and strategy for the new network.

The first two acquisitions by TEOCO involved organizations with relatively few employees. However, the last one involving TTI was a rather ambitious one because TTI had 300 employees, presenting financial challenges as well due to its size. While these acquisitions help to increase TEOCO’s value, profitability through cross-selling, diversity in employee skills and products/services, synergy, competitiveness, and output potential, they also bring about challenges such as culture clash, integration of key functions, management and HR challenges, and organization (Rice, Liao, Mart & Galvin, 2012). These challenges are likely to slow down performance, hence profitability due to the time involved in the integration process. As TTI is based in Israel, this particularly presented a big challenge for TEOCO although this also presents significant opportunities for cross-selling products and marketing synergies. In my view, TEOCO should focus on acquiring smaller but stable companies as this would facilitate change management, especially with regard to corporate culture and integration (Hitt, Ireland, and Hoskisson, 2011). Alternatively, the company should invest a lot of time in learning the target company if it happens to be a big

All industries need raw materials as inputs to their process. This includes labor for some companies, and parts and components for others. This is an essential function that requires solid buyer and seller relationships. If there are fewer suppliers or if they have certain strengths and knowledge, then they may control significant power over the industry. Threat of substitute is also high, there are more than enough B&R bearing companies out there willing to increase their customer base and if a certain company isn’t producing up to par, than customers will have no problem finding another supplier to satisfy their needs. Bargaining power of buyer will be high due to the increasing number of competitors who are willing to compete for their business and the increasing amount of substitute products available. Buyers tend to have more power when there are many suppliers in the industry and the products are standardized. Rivalry among competition will most likely be the most crucial force affecting Timken due to the high demand for ball bearings in industrializing countries and opportunities available to those companies who are successful in this market. Timken’s competitive edge is in its superior product quality.